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PAPERCRAFT CORP. v. FTC

January 14, 1970

Papercraft Corp., Plaintiff,
v.
The Federal Trade Commission, Paul Rand Dixon, Chairman, Philip Elman, A. Everett MacIntyre, Mary Gardiner Jones, and James M. Nicholson, Commissioners, Defendants.


Dumbauld, J.


The opinion of the court was delivered by: DUMBAULD

Plaintiff here, Papercraft Corporation (hereinafter sometimes called Papercraft) manufactures gift wrapping paper, and is respondent in a proceeding before the Federal Trade Commission (sometimes hereinafter called FTC), defendant here, charging Papercraft with violation of Section 7 of the Clayton Act (15 U.S.C. § 18), which reads as follows:

 
No corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no corporation subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another corporation engaged also in commerce, where in any line of commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.

 Plaintiff asks this Court to interrupt by injunction the course of the administrative proceeding and to require the Commission, before continuing with the scheduled hearing of the charges of Section 7 violation against plaintiff, to exercise the power which Section 6(b) of the Federal Trade Commission Act (15 U.S.C. § 46(b)) vests in the Commission by conducting a study by virtue of that Section concerning the market in gift wrappings and obtaining from the companies engaged in that business certain data concerning the volume of their business.

 Section 6(b) reads as follows:

 
To require, by general or special orders, corporations engaged in commerce, excepting banks and common carriers subject to the Act to regulate commerce, or any class of them, or any of them, respectively, to file with the commission in such form as the commission may prescribe annual or special, or both annual and special, reports or answers in writing to specific questions, furnishing to the commission such information as it may require as to the organization, business, conduct, practices, management, and relation to other corporations, partnerships, and individuals of the respective corporations filing such reports or answers in writing. Such reports and answers shall be made under oath, or otherwise, as the commission may prescribe, and shall be filed with the commission within such reasonable period as the commission may prescribe, unless additional time be granted in any case by the commission.

 On its face this provision appears to provide a discretionary measure which the FTC, in the exercise of its investigatory powers, may employ when, as, and if it sees fit, in order to develop data concerning an industry which might prove helpful to the Commission in its task of preventing monopolistic practices.

 This power is thus akin to that conferred upon the Interstate Commerce Commission enabling it to elicit valuation reports from pipe lines, Champlin Refining Co. v. U.S., 329 U.S. 29, 34-35, 91 L. Ed. 22, 67 S. Ct. 1 (1946), or that conferred upon the Civil Rights Commission enabling it to investigate and publicize unfair electoral practices, without actually adjudicating specific cases. Hannah v. Larche, 363 U.S. 420, 440-41, 4 L. Ed. 2d 1307, 80 S. Ct. 1502 (1960).

 Plaintiff argues, however, that the 6(b) power can be and has been used by the Commission as a "tool of litigation" to unearth evidence for use in particular proceedings, as well as a means of generating information useful in connection with the Commission's general regulatory functions. *fn1"

 As such a tool, plaintiff argues, it should be made available to Papercraft on equal terms with its governmental adversary; and failure to afford such equal access to this engine of litigation constitutes denial of due process and equal protection. Plaintiff also contends that Section 6 of the Administrative Procedure Act (5 U.S.C. § 555(d)) *fn2" requires the FTC to afford Papercraft this remedy as a sort of species of subpoena power.

 But it seems clear that the section of the Administrative Procedure Act relied upon by plaintiff refers only to the ordinary subpoena power which Section 9 of the Federal Trade Commission Act (15 U.S.C. § 49) creates for proceedings before that agency.

 There is nothing to prevent Papercraft from making full use of this specifically provided subpoena power as an appropriate and effective "tool of litigation" in preparation and presentation of its case in the Section 7 proceeding.

 Moreover, the sting is taken from any constitutional claims of unfairness or inequality on the part of the adversaries in the monopoly litigation by the assurance in open court by trial counsel for the Commission that it will not utilize the 6(b) power in ...


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